What markets are available to trade?
Trading Concepts – You can trade 180+ global markets including 84 FX pairs, 65 shares, 17 popular indices and more
What are the differences between a demo and trading account?
The spread is the price you pay on each trade order you make.
When trading a currency you are borrowing one currency to purchase another. The rollover rate is typically the interest charged or earned for holding positions overnight. A rollover interest fee is calculated based on the difference between the two interest rates of the traded currencies.
Positions at a discount
If the currency you are buying has a higher interest rate than that which you are selling, you will earn rollover fees – Trading Concepts this is referred to as a position being at a discount.
Positions at a premium
If the currency you are selling has a higher interest rate than that which you are buying, you will pay rollover fees. This is a position at a premium.
Start your journey into trading forex by getting to know a few key points including:
- Introduction to the bulls and the bears
- What is forex trading?
- Two trading opportunities
- What currencies can I trade?
- Pips, lots and leverage
R has a low interest rate whereas the NZD has a relatively high interest rate. You are borrowing the high-rate currency to buy the low-rate one, so you are trading at a premium: you will pay rollover fees on this trade if held overnight. If you sell EUR (i.e. go short) to buy NZD, you will be trading at a discount and earn rollover rates on this trade.
Definition of ‘overnight’
Currency markets trade 24 hours a day through the working week, Trading Concepts so ‘overnight’ is defined as holding the position at market close in New York – 5pm ET.
Introduction to Order Types
A market order is the most basic order type and is executed at the best available price at the time the order is received.
Limit orders allow you the flexibility to be very precise in defining the entry or exit point of a trade. Keep in mind that limit orders do not guarantee that you will enter into or exit a position, because if the specified price is not met, you order will not be executed.
A stop order triggers a market order when a predefined rate is reached. A buy stop order triggers a market order when the offer price is met; a sell stop order triggers a market order when the bid price is met. Both stop orders are executed at the best available price, depending on available liquidity. Stop orders, also called stop loss orders, are a frequently used to limit downside risk.
Stop orders help to validate the direction of the market before entering into a trade. It’s important to keep in mind, that stop orders are executed at the best available price after the market order is triggered, depending on available liquidity.
A trailing stop is a stop order that is set based on a predefined number of pips away from the current market price. A trailing stop will automatically trail your position as the market moves in your favor.
If the market moves against you by the predefined number of pips, then a market order is triggered and the stop order is executed at the next available rate depending on liquidity.
Contingent orders combine several types of orders and are used to execute against a specific trading strategy. Contingent orders require that one of the orders is triggered, before the other order becomes activated – Trading Concepts;
The most common types on contingent orders are If/Then and If/Then OCO.
An if/then order is a set of two orders with the stipulation that if the first order (known as the “if” order) is executed, the second order (the “then” order) becomes an active, unassociated, single order. Unassociated orders are not attached to a trade and act independently of any position updates. In cases where the “if” order does not execute, the “then” single order will remain dormant and will not be executed when the market reaches the specified rate. Note that when either part of an if/then order is cancelled, all parts of the order are cancelled as well.
An if/then OCO provides that if the first order (the “if” order) is executed, the second order (the “then” order) becomes an active unassociated one-cancels-other (OCO) order. Remember, unassociated orders are not attached to a trade and act independently of any position updates. As with a regular OCO order, the execution of either one of the two “then” orders automatically cancels the other.
In cases where the “if” single order does not execute, the “then” OCO order will remain dormant and will not be executed when the market reaches the specified rate. When any part of an if/then OCO order is cancelled (including either leg of the OCO order), all other parts of the order are cancelled as well.
Expirations of Orders
Market orders are day orders as they are executed at the next available price. However, an expiry value of End of Day (EOD) or Good Till Cancel (GTC can be submitted for all other order types.
- End of Day – an order to buy or sell at a specified price will remain open until the end of the trading day, typically at 5pm / 17:00 New York – Trading Concepts.
- Good Til’ Cancelled – an order to buy or sell at a specified price will remain open until it is filled or cancelled. At FOREX.com GTC orders will automatically expire on the Saturday following the 90th calendar day from the date the order was entered.
NOTE: The range of order types available varies by our trading platforms.
Forex Liquidity And Volatility
What Is Liquidity?
Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the foreign exchange market is so liquid is because it is tradable 24 hours a day during weekdays. It is also a very deep market, with nearly $6 trillion turnover each day. Although liquidity fluctuates as financial centres around the world open and close throughout the day, there are usually relatively high volumes of forex trading going on all the time.
What Is Volatility?
Volatility is the measure of how drastically a market’s prices change. A market’s liquidity has a big impact on how volatile the market’s prices are. Lower liquidity usually results in a more volatile market and cause prices to change drastically; higher liquidity usually creates a less volatile market in which prices don’t fluctuate as drastically.
Liquid markets such as forex tend to move in smaller increments because their high liquidity results in lower volatility. More traders trading at the same time usually results in the price making small movements up and down. However, drastic and sudden movements are also possible in the forex market. Since currencies are affected by so many political, economical, and social events, there are many occurrences that cause prices to become volatile. Traders should be mindful of current events and keep up on financial news in order to find potential profit and to better avoid potential loss.
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